• Tax collections by 44 states fell by 11 percent in the third quarter, according to the Nelson A. Rockefeller Institute. The impact on residents: Jobs and hours are being cut, while school taxes are going up, because municipalities are getting less state aid.

• The continuing housing crisis is hurting even the Federal Housing Administration. An audit shows that its capital reserves have fallen far below the minimum level it is supposed to have. One Congressman introduced a bill to raise down payments on home purchases.

• The Labor Department reported that the unemployment rate for October rose to 10.2 percent. A rate that high was not expected until 2010.

• The Bureau of Labor Statistics launched the fourth quarter with a report that unemployment is a lot worse than previously stated: From when the recession started in December, 2007, the economy has lost roughly 8 million jobs, not 7 million. The rate of unemployment is 10.2 percent. And in the 12 months ended In March, 5.6 million jobs were lost, not the 4.8 million previously reported.

• According to the Federal Reserve, capacity utilization in the U.S. was about 70 percent. The unused capacity will slow the recovery, because companies will want to use nearly all their current capacity before they think about buying anything new—or hiring more workers.

• The Agriculture Department reports that the number of people receiving food stamps rose to 35 million in June, the latest month for which figures are available. The figure represents a 22 percent increase from June 2008.

• According to the Federal Reserve, consumer credit fell at an annual of 10.5%. Revolving credit (mostly credit cards) dropped by 8 percent, and nonrevolving credit (mostly auto and education loans) dropped by 12 percent—all this in July, the latest month for which figures are available. Likely result: a hefty drop in consumer spending, which accounts for 70 percent of gross domestic product.

• Data released by the New York Attorney General show that nine banks which received $175 billion of taxpayer money through the Troubled Asset Relief Program paid out almost $33 billion in bonuses last year. (Ed. note: Does this mean taxpayers can deduct that money as charity?)

• States squeezed for cash: In the first quarter of 2009, state tax revenue fell by nearly 12 percent—and the drop is getting worse. Pre-summer results for 45 states showed a drop of 20 percent, compared with a year ago. Across the country, states are curtailing services, closing agencies, and cutting the hours of employees. One result: More peope with less money.

• The Chairman of the Joint Chiefs of Staff has called for an additional 40,000 troops in Afghanistan, which would raise the total to 102,000, approaching the total in Iraq. Outlook: The surge would cost billions of dollars more per month, pulling the U.S. even deeper into debt. (Ed. note: The surge may be good for U.S. and global security, but our focus is financial.)

Compiled June 15 - July 25,
2009

• According to a Wall Street Journal analysis
published in late July, the volume of loans held
by 15 big banks fell by 2.8 percent in the second
quarter—and more than half of that volume came
from refinancing, not new loans. This is bad
news for the economy, because a lack of new loans
hampers growth.

• By the end of the first quarter, the rising
U.S. federal deficit had set a new record—over
$1 trillion. That big a spread between receipts
and outlay could damage the dollar and drive
up interest rates. Another possible result: It
could scare off tentative supporters of the administration’s
proposals to fix the economy and health care.
Main cause of the gap: falling tax receipts and
spending on stimulus and social safety-net programs.

• A cash crisis has forced Philadelphia
to stop paying businesses that sold the city
goods and services. The mayor cited a drop in
tax revenues and rising pension payments as main
causes of the crisis. Many cities across the
country are in a similar position, though few
have stopped paying vendors.

• In the early stages of the recession, the
vast majority of foreclosed loans were for low-priced
homes. In terms of resales, nearly 50 percent
was driven by foreclosures on low-end homes.
No longer. Now loans for higher-priced homes
are also being foreclosed, and at a rising rate.

• Other countries may not like us much, but
they like our currency even less. In 2000, 70
percent of foreign currency reserves were held
in dollars. Now the figure is down to 64 percent,
according to the IMF. One effect could be the
higher interest rates Uncle Sam may have to pay
to entice other countries to hold dollars.

• Pump prices up: The price of regular-grade
gasoline fell during the second quarter to a national
average of around $2.43 per gallon. But the outlook
is for higher prices this summer and fall—and an
increasing drag on the economy, as drivers scale
back other purchases to pay for gas.

• Mortgage rates up: The rate
on 30-year, fixed rate mortgages has reached
5.5 percent, up sharply from a low of 4.85 percent
in the first quarter.

• Interest rates up: The yield on 10-year
Treasury bonds has jumped to around 3.8 percent.
That’s not historically high, but coming in the
midst of a recession, it’s bad news: Higher rates
mean large segments of the economy will have
to pay more to borrow—federal and state governments,
credit card holders, home buyers, car buyers,
and companies trying to survive. The higher cost
of money could hold back buying and business
expansion, slowing the recovery.

• Bottom-up suppliers: It’s not
just General Motors and Chrysler that have gone
bankrupt. Viseton, largest supplier to Ford,
and Metaldyne, largest supplier to Chrysler,
filed for bankruptcy at the end of May. Delphi,
largest supplier to General Motors, went bankrupt
over three years ago.

• Unused people: The Labor Department
reported that the number of people receiving
unemployment benefits had risen to 5.5 million,
raising the unemployment rate to over 9 percent.
Economists say the job picture is likely to stay
dim into 2010. Over 700,000 employed workers
have only part-time jobs, but would like to work
full time.

• Unused capacity: One-third
of U.S. manufacturing stood idle at the end of
the first quarter, the lowest use rate since
1948.

• Unused rail cars: The Union
Pacific Railroad announced that 25 percent of
its carrying capacity was idle. It has parked
over 50,000 of its freight cars.

• Unused homes: The U.S. Census
Bureau reported a record 19.1 million vacant
homes at the end of the first quarter. Empty
homes tend to stifle new home construction and
push down prices.

• Gloomy forecast: The World
Trade Organization predicted that global trade
would drop by 9 percent in 2009. This was the
most negative forecast in the WTO’s 62-year history.

• Budget blues: The non-partisan
Congressional Budget Office said that federal
spending plans for 2009 may result in deficits
that average $1 trillion a year for the next
10 years. Deficits tend to increase the cost
of money and stoke inflation.

• Over 35 banks closed: The Federal
Deposit Insurance Corporation has taken over
more than 35 banks so far this year.